Obama and Congress giving up on the economy?

This is a discussion on Obama and Congress giving up on the economy? within the General Discussions forums, part of the Community Boards category; Originally Posted by Daved
I don't understand your position, abachler. On the one hand, you post that because the unemployment ...

I don't understand your position, abachler. On the one hand, you post that because the unemployment rate is still high, the economy still requires more legislation to be fixed (implying that it is not getting better and on its way to recovery), but at the same time you also viewed and agreed with the graph that I posted which clearly indicates that unemployment only starts dropping when the recession ends. Which is it?

I do NOT agree that unemployment only starts dropping when the recession ends. I assert that the recession only ends when unemployment starts dropping, big difference. Dropping unemployment LEADS the end of the recession, it is not a result of the end.

Assuming you were being serious (not always a safe assumption, I know), the point of the thread seemed to be that the apparent focus of the executive and legislative branches on health care reform is to the detriment of the recovering economy. Everything I've read and seen indicates that the economy is recovering just fine (not great, but fine) and there isn't a whole lot that can be done legislatively to speed up the process. So I don't understand your point.

There are several things that can be done to prevent the problem from occurring again. Congress has done nothing to address the root causes. They threw 800 billion at the problem and it has had little to no effect outside of the banking industry because the problem isn't money, the problem is the system and until this is addressed effectively with legislation we will continue to have an unstable economy. If people are fine with having the economy come closer and closer to a repeat of 1929 every 5 years until eventually we have something that makes 1929 look like a 'jobless recovery' then by all means continue as before. If you do what you have always done you will get what you have always gotten. Insanity is doing the same thing and expecting different results.

Until you can build a working general purpose reprogrammable computer out of basic components from radio shack, you are not fit to call yourself a programmer in my presence. This is cwhizard, signing off.

lol, I had forgotten how utterly pointless it is to have a discussion with you.

Try and remember this time then, so you don't keep making the same mistake.

Vis "Consumer Confidence is mostly affected by employment" -- the employment rate is not like air temperature, something you notice on the way to the store. Also, consumer confidence indexes are created from phone surveys by people like Nielson, so it is a extremely abstract to refer to it being "affected" in a definite way by some other factor. In other words, it is something that is measured, not derived or calculated.

Originally Posted by abachler

Congress has done nothing to address the root causes.

No, and they almost certainly cannot because the American electorate has it's head stuck in the sand about what "the root causes" really are. For that reason, the "boom and bust" cycle is accepted as natural; generally, we do not even bother trying to fight nature in this way, we accept and deal with it as best we can.

No idea what you mean.
But I really don't want to discuss with you well established economical principles.

I imagine not, considering this ISN'T ONE. Admit, like abachler, you just cannot proceed unless you want to sound like more and more of a nut and charlatan (sorry, I have to be just a lil bit nasty sometimes ).

Originally Posted by John Maynard Keynes

Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations, whether moral or hedonistic or economic. Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits - a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.

Keynes could be dismissed as a leftist, but here's something "contra Keynes" that still calls into question the significance and validity of Consumer Confidence Indexing:

I imagine not, considering this ISN'T ONE. Admit, like abachler, you just cannot proceed unless you want to sound like more and more of a nut and charlatan (sorry, I have to be just a lil bit nasty sometimes ).

Careful! The discussion has been civilized so far.

I do not wish to discuss it with you anymore because I don't want to start digging reading material to feed your uninformed opinion. Do it yourself.

When I am confronted with similar statements (and I have) I tend to drop my ego for a moment and think "maybe, just maybe he has a point. I'll research this topic a little more before I keep making a fool of myself". You obviously think otherwise. One more reason to just ignore you.

>> Dropping unemployment LEADS the end of the recession, it is not a result of the end.
Then why does the unemployment rate drop after the recession ends on multiple occasions in that graph?

>> Congress has done nothing to address the root causes.
I didn't read the articles, I just noticed the headlines, but didn't Obama give a speech just today about regulations they want to add to help preventing this from happening again? I believe one headline says that Obama expects the new legislation to be passed this year. Maybe you jumped the gun on your assumption?

>> Dropping unemployment LEADS the end of the recession, it is not a result of the end.
Then why does the unemployment rate drop after the recession ends on multiple occasions in that graph?

Yeah don't use use quote tags, people might want to know who you are quoting and have a convenient link to the original post..

I already addressed that is a previous post, which you would know if you read more of my posts than was necessary to form a knee jerk reply.

>> Congress has done nothing to address the root causes.
I didn't read the articles, I just noticed the headlines, but didn't Obama give a speech just today about regulations they want to add to help preventing this from happening again? I believe one headline says that Obama expects the new legislation to be passed this year. Maybe you jumped the gun on your assumption?

I believe I originally posted this yesterday well before his address. And I can't be expected to be a mind reader. Can't act based on information I don't have or doesn't exist yet.

Until you can build a working general purpose reprogrammable computer out of basic components from radio shack, you are not fit to call yourself a programmer in my presence. This is cwhizard, signing off.

Yeah don't use use quote tags, people might want to know who you are quoting and have a convenient link to the original post..

I take this as you asking me to use quote tags. No problem.

Originally Posted by abachler

I already addressed that is a previous post, which you would know if you read more of my posts than was necessary to form a knee jerk reply.

I'm not sure why you think my post was knee-jerk. If you'd kindly point to the post where you addressed that I'd appreciate it. I either didn't see it or didn't understand how it applied to my question: Why does the unemployment rate drop after the recession ends on multiple occasions in that graph, rather than just before or at the exact time, if in fact it leads the end of the recession? Note that we might just be talking about different things. But that's why I'm asking for further explanation and/or a direct answer to the question.

Originally Posted by abachler

I believe I originally posted this yesterday well before his address. And I can't be expected to be a mind reader. Can't act based on information I don't have or doesn't exist yet.

I think you misread my statement. I said, "Maybe you jumped the gun on your assumption?" In other words, it sounded as if you assumed they just gave up on the economy, when perhaps a little more patience would allow you to wait and perhaps not make those erroneous assumptions.

President Barack Obama warned financial firms on Monday to heed the lessons of Lehman Brothers' collapse a year ago and get behind a regulatory overhaul he wants Congress to pass this year.

Obama, who has focused most of his energy on healthcare reform in recent weeks, went to Wall Street to highlight another top priority of his administration -- updating financial rules to prevent another economic collapse.

To david, I stated in this post that the numbers verify my claims except in the most recent examples where the Republicans prematurely announced the end of the recessions. The graph Still supports my other claim that falling employment rates are a leading indicator of a recession. In addition there are several section of that graph where it was obviously a recession but rather than have one long term recession it is broken into multiple smaller recessions.

Most recently, i.e. in the last 10-12 years, the federal govt has stopped including M1 in its report of economic activity. This is because overwhelmingly instability of M1 is a highly effective predictor and verification of a recession. More specifically the ratio of M0 to M1 significantly decreases leading up to a recession. During a recession M2 decreases as fiat wealth is revalued (at a loss) until the valuation approaches actual (intrinsic) value. The $800B essentially went to eliminate the lost value of this reevaluation. Essentially it delayed the end of the recession. Since the $800B went directly into M1, not M0, it effectively increased M1 by $8 trillion USD. This definitely helped liquidate the credit markets by making more credit available, but excess credit is what caused the problem in the first place. $100 of M0 costs the possessor nothing. $100 of fiat money costs the current interest rate until that is repaid.

"RENT, CONSIDERED as the price paid for the use of land, is naturally the highest which the tenant can afford to pay in the actual circumstances of the land." Adam Smith

As real estate prices grew out of control, the rent (payments on home loans is rent in this context) demanded for the use of that resource exceeded the ability of the tenants to pay. As employment began to decrease, while rent continued to increase, the rate at which tenants defaulted increased. Most banks will not accept partial payments in lieu of foreclosure in a market that appears fluid. As the default rate increased adjustable interest rate, which are keyed to the default rate, increased, which only made the issue worse by increasing the rate of defaults.

So, as employment continues to decrease, deflation will set in as resources are revalued eventually. That deflation, by increasing the leverage of the remaining M0 will generate the increased economic activity necessary for a recovery. The alternative of course is to increase M0 directly by increasing employment. Well, I suppose you could also increase it by just handing every unemployed person $100k, but a more sustainable recovery will come from increasing employment since that also generates new wealth.

Until you can build a working general purpose reprogrammable computer out of basic components from radio shack, you are not fit to call yourself a programmer in my presence. This is cwhizard, signing off.

So, as employment continues to decrease, deflation will set in as resources are revalued eventually. That deflation, by increasing the leverage of the remaining M0 will generate the increased economic activity necessary for a recovery.

On the radio this morning: the US inflation rate rose by 1.7% last month, mostly because of a 10% increase in auto sales (thanks to Obama's "Cash fer Clunkers" initiative), and gas prices, but also because of an across the board increase in consumer spending.

Not really enough to call it "proof" yet but I do not think there will be significant deflation here, at least not beyond what already occurred in the housing market.

To david, I stated in this post that the numbers verify my claims except in the most recent examples where the Republicans prematurely announced the end of the recessions. The graph Still supports my other claim that falling employment rates are a leading indicator of a recession. In addition there are several section of that graph where it was obviously a recession but rather than have one long term recession it is broken into multiple smaller recessions.

I'm quoting this bit not because the rest of the post is unimportant, but simply because it sums my thinking.

Premature announcements to the end of recession are unfortunately common around the world as governments feel the need to battle the political consequences. So I too have trouble looking at graphs while delineating temporal recession landmarks that don't do it based solely on the data being displayed, but instead on officially announced dates. It becomes an open debate.

In any case while I defend that employment rates can be a leading indicator in and out of a recession, I'm prepared to accept this may not always be the case. There is at least one situation where this is very evident; Small economies overly sensitive to their Trade Balance.

A country like Portugal does not "initiate" a recession of its own. It's very difficult for our economy to behave in a fashion as to enter a recession without any outside economical influence. Similarly, it is very hard for us to get out of a recession without any external stimuli. In countries like these, recessions almost always happen due to a sudden shift in the trade balance. More specifically, a considerable reduction in exports. Unemployment follows only after. We do not suffer a recession until it is clearly underway in our trade partners and we only leave after they have. (Why an interest and even interference in foreign domestic policy is not only acceptable, but possibly healthy).

...

Similarly, there can be another approach. In all honesty we cannot fundament one thought or the other. Many aspects of economy have become hard to understand. Economy is scientific field and it carries with it the need to formulate theories. We can argue about the leading characteristics of employment rates in a recession, but we cannot prove it. But neither can the other side.

Instead it is possible that the discussion is circular. In asking what came first, if the chicken or the egg, we go nowhere. But probably the real answer they both did.

I'm prepared to agree that economic activity can stimulate employment rates, and these in turn further help stimulate the economic activity, which will further employment rates, which... you got it.

In today's economy companies generally survive by imitation. If everyone is driving that way, then that's the way. Even if things look good on this end, there is no harm in cutting expenses and reducing risks here and there, just in case. "There's a storm in the horizon". Similarly, if everyone is starting to look happy, then there's no reason to stay gloomy and probably it is time again to start investing.

To david, I stated in this post that the numbers verify my claims except in the most recent examples where the Republicans prematurely announced the end of the recessions. The graph Still supports my other claim that falling employment rates are a leading indicator of a recession. In addition there are several section of that graph where it was obviously a recession but rather than have one long term recession it is broken into multiple smaller recessions.

You're right, I did miss that post from you. My apologies. However, it doesn't answer my question satisfactorily. To my knowledge, recessions aren't defined by administrations, they are defined based on actual numbers (the most simple one being two consecutive quarters of negative GDP growth). Also, it's not just the most recent recessions that end before the numbers drop. It's quite a few of them, and pretty much none of them have unemployment lowering before the recession ends.

Remember, I'm only claiming that the current level of unemployment does not mean that the economy is not recovering. Everything I've read, your claims notwithstanding, states that the numbers are indicating the economy is getting better and that unemployment rate increase is slowing and should peak later this year or early next year. If that's what's happening, I don't understand what you're calling for in terms of actual legislation.

If that's what's happening, I don't understand what you're calling for in terms of actual legislation.

Let's start with a federal maximum income cap of 100 times the minimum wage

If you just can't seem to get motivated for $1 million a year then I submit for your consideration that you are just a lazy piece of crap that probably doesn't need to be in charge of makign decisions that effect other peoples lives. If you want to make more money, just lobby congress to increase the minimum wage.

Secondly, no good or service may be imported unless it was produced in compliance with US laws. This will prevent skirting the above as well as shopping around for lenient environmental law havens. As well as avoiding paying minimum wage to their workers.

Third, Imports cannot exceed domestic production on finished goods by tonnage. This specifically exempts raw materials such as lumber, mineral ores, petroleum which are imported in their natural state. That would also exempt crops. it would not exempt steel and other alloys, automobiles, t-shirts, toilet paper, or condoms.

Until you can build a working general purpose reprogrammable computer out of basic components from radio shack, you are not fit to call yourself a programmer in my presence. This is cwhizard, signing off.